By Nkiruka Nnorom
Equity researchers at FBNQuest Merchant Bank, the asset management subsidiary of First Bank of Nigeria (FBN) Limited, have said that Nigeria’s economy would return to a growth path in the first quarter (Q1) 2021, after contracting by a record 6.1 percent in the first half of the year following the effect of the COVID-19-induced lockdown on the economy.
They also projected a rapid acceleration in inflation rate at 13.1 percent at the end of 2020, while the monetary policy rate is expected to stand at 12 percent at the end of this year and next.
Chinwe Egbim, Senior Economist, FBNQuest Merchant Bank, made the projections at the virtual 2020 FBNQuest Media Engagement Session, saying that the economy would record only a weak recovery of 0.1 percent at the end Q1’21.
According to her, the rate of contraction would reduce with the nation’s economy contracting by 3 percent year-on-year (y/y) by Q4’20, an improvement from the level in H1’20. She said: “Alongside enhanced credit availability, the federal government’s proposed spending and its borrowing plans provide a little comfort for the macro story. We think spending will be trimmed in the likely event that revenue collection falls short of the heady target set, which the FG projects N10.8 trillion, even as its capacity to prime the pump is substantially lower than that of its peer governments in Emerging Markets.
“However, when the population is growing at up to three percent annually and in the absence of a nationwide famine, it is difficult to see more than a token contraction in agriculture.”